On Power and Progress (2) & Spotting Book Concepts in Real Life

I am going to go on a tangent a little bit before talking about the topic at hand. That tangent is, I just discovered the "Big Ideas Simply Explained" series. There are different books on different topics, economics, math, biology, sociology, psychology. I found a reading list on Goodreads, and I was so excited. I was so glad.

This is the order I plan to read them: history, economics, sociology, and then psychology. Then I will read that other book by Daron Acemoglu and James A. Robinson, Why Nations Fail. I will read that after. So I already have five books that I plan to read after Power and Progress. Now, back to Power and Progress.

I just started this documentary on Netflix about Boeing. In fact, I had actually seen the first Boeing documentary when it came out. At that time, I had not boarded a plane at all in my life. I had never boarded a plane. So I was quite scared about the problems Boeing had and the different crashes that happened.

Statistically, the issues came down to mechanical errors and pure oversight. Back then, I just thought, oh, Americans are being reckless as usual. Now that I am reading Power and Progress, it clicked. I started the documentary, and boom, this is exactly what the book discusses.

The authors explain that after World War II, blue-collar jobs shifted toward a rise in white-collar management. Quality control was strong. You can trace fair compensation back to Henry Ford when he introduced better wages and benefits. More workers meant more benefits. Then, in the 1970s, economists like Milton Friedman argued that the sole goal of a CEO is to maximize shareholder value and it led to more constriction against Union Organisations. That idea was aggressively taught in business schools, and MBA graduates brought that exact playbook back to corporate boards.

Now, watching the Boeing documentary, it mentions executives like James McNerney, who had an MBA. It became entirely about maximizing shareholder value. In earlier days, Boeing engineers ran strict quality assurance. Two or three people would inspect a part to ensure it met absolute standards.

Then you bring in executives with MBAs who want to cut costs and boost short-term margins for shareholders. The more costs you cut, the higher the fiscal profits, and the CEO takes all the credit and bonuses. That meant you had to increase share price by whatever means necessary. They began offshoring manufacturing, outsourcing parts overseas, and laying off staff to cut costs. The documentary highlighted that culture, similar to Jack Welch at General Electric, where managers ranked staff and cut the bottom 10 percent every year. Because that model produced short-term gains, other companies copied it.

For Boeing, during the development of the 787 Dreamliner, different parts were outsourced globally to reduce costs. . The initial budget was around 10 billion USD, but they tried to cut it down to 5 billion USD. Offshoring took over: wings and batteries came from Japan, the mid-fuselage came from Italy, wingtips & tail sections came from South Korea. Some other parts were in Australia, Canada, England. Just about all the parts of the plane were from different countries just to cut costs. That would of course have effect on safety and quality of those parts. So the workers just accept what has been given and snap the plan together in just three days.

Imagine working in a culture where you do not know if your job is secure. That creates severe pressure because you just want to deliver quickly. If you work on mechanical assemblies, you rush to ship the part so you do not get flagged as inefficient or laid off, even when that speed destroys product quality.

Speaking of quality, when I went home to the East in July, I noticed our generator carton. It has been in my house since around 2010. I looked closely and saw the ISO 9001 stamp. I thought, wait, this is the ISO standard for quality management and customer satisfaction. It was right before my eyes.

That generator gave us so much trouble over the years, mostly from constant use. Generators are not designed for daily, non-stop power generation the way we use them in Nigeria. What is intended to last ten years elsewhere gets worn out in a few months here. We repaired it repeatedly until it broke down completely.

When I spotted that ISO stamp, I was pleasantly surprised. Some things sit in plain sight without us understanding what they mean. In the past, I assumed it was just a serial number because of the "S" in ISO. I did not realize it was an international standard for quality management systems. I am currently taking ISO certification courses myself, mostly the accessible ones, but I want to keep learning. Those are my thoughts on how management decisions and quality standards tie together.